Theresa May must choose between keeping close EU ties or signing a trade deal with Trump

U.S. President Donald Trump meets with British Prime Minister Theresa May during the U.N. General Assembly in New York, U.S., September 20, 2017. REUTERS/Kevin Lamarque

Britain will have to sacrifice access to EU markets if it wants a special trade deal with the US, a new parliamentary report warns.

The International Trade Committee says Britain will face a "binary choice" after Brexit when it comes to trade.

The report says the UK government has failed to produce sufficient research into the pros and cons of a trade deal with the US.

Britain will likely have to lower standards in areas like food and agriculture in order to get a wide-ranging free trade agreement with the US.

LONDON — Britain will face a stark choice when it comes to trade after Brexit: either stay closely aligned with the European Union or negotiate a comprehensive agreement with the United States of America.

That's the verdict of a report published today by the UK parliament's International Trade Committee. The committee made up of MPs from across the House of Commons warns Theresa May against rushing into a free trade deal with Donald Trump's US without first establishing a "clear, comprehensive and evidence-based trade strategy."

The report says that a wide-ranging free-trade agreement with the US could boost Britain's economy by 0.35% of GDP after Brexit. However, a deal would inevitably come with major trade-offs. The UK would have to diverge significantly from EU rules in order to enter an agreement with the US, as standards in certain areas would be considerably lower.

This means Britain would end up with significantly less access to the European single market than it currently has, as Brussels is clear that privileged access must come with complete adherence to the market's rules and regulations.

The report reiterates previous warnings to May's government that any US administration — particularly one led by President Trump — will be keen for Britain to lower its standards in areas like agriculture.

An example often cited is chlorinated chicken, which is banned from entering EU markets due to the bloc's hygiene rules. This is also the case with the use of growth hormones in beef farming, the spraying of pig carcasses with lactic acid, and the sale of unlabeled genetically modified food. The US has been clear that Britain will likely have to abandon these rules when it leaves the EU if it wants a wide-ranging free trade agreement.

The report states: "The UK will have to make fundamental decisions about what regulatory direction it wants to head in after Brexit.

"Decisions about the level of regulatory alignment the UK has with the EU and the US must not be considered in siloes, but with full regard to the impacts of any decision on the UK's trading relationships with other partners around the world."

It adds: "Some witnesses told us that the UK faces a binary choice —'stay broadly aligned with the EU regulatory system and do a tariff deal with the US' or 'negotiate a new deep trade agreement with the US.'

"In order 'to give ourselves the flexibility to negotiate a deep [US] trade agreement,' we were told that the UK would need to remove itself 'from the regulatory sphere of the EU' and align with the US's regulatory model."

The report also criticises the government for failing to produce more detailed modelling of what the benefits and costs a UK-US free trade deal after Brexit would be.

"While there may be some limits to the accuracy of such modelling, the Government's explanation that the agreement's content is not yet known and therefore cannot be modelled is not satisfactory," it says. Britain's Prime Minister Theresa May and European Commission President Jean-Claude Juncker hold a news conference at the EC headquarters in Brussels, Belgium December 8, 2017. REUTERS/Yves Herman Yves Herman/Reuters

"Given how central new free trade agreements are to the UK's Brexit strategy, the Government must make the economic case for a UK-US agreement by undertaking detailed work modelling the potential effects of a UK-US agreement on the economy."